Bloomberg News

Dow Rises Above 15,000 While Aussie Dollar Falls on Rate Cut

May 07, 2013

European Shares Climb on Earnings as Euro Gains

Financial traders monitor data on computer screens beneath a display of the DAX Index curve at the Frankfurt Stock Exchange in Frankfur. Photographer: Ralph Orlowski/Bloomberg

Global stocks rose, with the Dow Jones Industrial Average closing above 15,000 for the first time, as earnings at companies from Societe Generale SA to DirecTV and Allianz SE beat estimates and German factory orders increased. Australia’s dollar fell as the central bank cut interest rates.

The Dow jumped 87.31 points to close at 15,056.2 at 4 p.m. in New York and the Standard & Poor’s 500 Index rose 0.5 percent to 1,625.96, reaching a record for a fourth straight day. The Stoxx Europe 600 Index added 0.3 percent to reach an almost five-year high. Corporate bond risk in Europe retreated to the lowest in three years. The Australian dollar fell versus all of its 16 major peers. Oil slipped 0.6 percent. Ten-year Treasury yields rose two basis points to 1.78 percent, the highest in almost a month.

Societe Generale, France’s second-largest bank, reported earnings dropped less than analysts estimated, while Allianz, Europe’s biggest insurer, said first-quarter profit climbed 24 percent. The Reserve Bank of Australia lowered its main rate by a quarter percentage point to 2.75 percent, a day after European Central Bank President Mario Draghi said further cuts in rates are possible following a reduction to an all-time low last week.

“Earnings reports are solid and earnings expectations have come down to level that begets a rotation into cyclicals that have strong balance sheets and strong dividend yields,” Steven Soranno, a Bethesda, Maryland-based senior equities analyst for Calvert Investments Inc., which oversees about $12 billion, said by telephone. “The old adage used to be ‘Don’t fight the Fed.’ Now it’s ‘Don’t fight the Feds,’ plural. Australia came in with the rate cut and that just adds to the coordinated central bank easing.”

Market Movers

Caterpillar Inc., JPMorgan Chase & Co. and Verizon Communications Inc. rose more than 1.6 percent to lead the Dow’s gain today. Twenty-three companies in the gauge were due to report results today, including Walt Disney Co. Of the index members to have posted earnings so far this season, 72 percent topped analysts’ profit projections while 53 percent missed on sales, according to data compiled by Bloomberg.

DirecTV (DTV:US) gained 6.9 percent after adding more subscribers than analysts projected. Fossil Inc. advanced 9 percent after earnings beat estimates and the company lifted its forecast for the year. First Solar Inc. plunged 8.9 percent after earnings fells short of estimates.

Dow Leaders

American Express Co., Home Depot Inc. and Disney have led the Dow’s rally since its 2009 low, climbing more than 300 percent as the world’s largest economy recovered from the worst recession in seven decades. Hewlett-Packard Co., the largest personal computer maker, is the only stock still in the measure to fall since March 9, 2009. The shares are down 20 percent as consumers favor tablets and mobile phones over PCs.

About 84 percent of S&P 500 stocks traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg. That’s the highest level since March 14, while below the two-year high of 93 percent in January.

The Stoxx 600 advanced for the fourth time in five days, closing at the highest level since June 2008. SocGen (GLE) rallied 5.7 percent to an eight-week high and Allianz rose 3.6 percent to the highest level in almost five years.

HSBC Jumps

HSBC Holdings Plc, Europe’s largest bank, jumped 3 percent after saying first-quarter profit almost doubled.

Germany’s DAX Index jumped 0.9 percent to a record. German factory orders, adjusted for seasonal swings and inflation, increased 2.2 percent from February, when they also advanced 2.2 percent, the Economy Ministry said. Economists forecast a 0.5 percent drop, according to the median of 39 estimates in a Bloomberg News survey.

The cost of insuring European corporate bonds declined to the lowest level since May 2010, according to data compiled by Bloomberg. The Markit iTraxx Europe Index of 125 investment- grade companies fell two basis points to 89.7 basis points.

Alstom SA sank 12 percent, the most since 2008, after the world’s third-biggest power-equipment maker cut its profitability forecasts as full-year earnings missed estimates.

Portugal’s notes led gains in the euro area’s so-called periphery as the nation’s first sale of 10-year bonds since its bailout in 2011 attracted demand for more than three times the amount being raised.

The nation’s two-year yields dropped to the lowest since July 2010. Investors submitted bids for 10.2 billion euros ($13.4 billion) of the debt maturing in February 2024, compared with the 3 billion euros being sold, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

European Bonds

Austria sold 660 million euros ($863 million) of 10-year bonds at a record-low yield of 1.621 percent and the same amount of securities due in 2019 at 0.794 percent. Germany’s 10-year bond yields rose six basis points to 1.30 percent and the rate on gilts climbed seven basis points to 1.79 percent.

Volatility on Denmark’s bonds was the highest among developed markets tracked by Bloomberg followed by those of the Sweden and Israel, according to measures of 10-year debt, the yield spread between two- and 10-year securities and credit default swaps.

Emerging Markets

The MSCI Emerging Markets Index gained for a third day, adding 0.7 percent and reaching an almost two-month high. The Hang Seng China Enterprises Index of mainland companies rose 1 percent and the Shanghai Composite Index (SHCOMP) added 0.2 percent. Malaysia’s benchmark gauge climbed 1.4 percent, capping its biggest two-day rally in four years, after Prime Minister Najib Razak’s election victory.

The yuan strengthened 0.2 percent against the dollar as Premier Li Keqiang pledged to come up with a plan this year to let investment capital move more freely in and out of China.

The Australian dollar fell as low as $1.0155, the least since March 4, before trading 0.7 percent lower at $1.0181. The yen advanced against 15 of its 16 major peers, rising 0.3 percent to 99.01 per dollar.

Natural gas slid 2.3 percent and gold and sugar lost at least 1 percent to lead declines in 15 of 24 commodities tracked by the S&P GSCI Index.

West Texas Intermediate crude declined for the first time in four days, slipping 0.6 percent to $95.62 a barrel. Trading on the London Metal Exchange resumed after a public holiday yesterday. Rubber rallied 6.8 percent in Tokyo, the most since November 2011, after trading was closed for the past two days. Wheat climbed 0.9 percent after the U.S. government said winter- crop conditions worsened.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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